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Militants in Iraq use mafia tactics to fund operations

Islamic State of Iraq and the Levant using theft, extortion, kidnapping to become one of best-funded extremist organizations in the world.

Fighters from the Islamic State of Iraq and the Levant march in Raqqa, Syria, in this undated photo. Using mafia-like tactics of extortion, theft and kidnapping, the militant group has become one of the best-funded extremist organizations in the world. (The Associated Press)

By Yochi DreazenForeign Policy

Wed., June 18, 2014

WASHINGTON—When fighters from the Islamic State of Iraq and the Levant (ISIL) stole tens of millions of dollars from a bank in Mosul earlier this year, it wasn’t simply a startling symbol of the collapse of Baghdad’s control over Iraq’s second-largest city.

The brazen theft was instead a stark illustration of one of the most alarming aspects of ISIL’s rise: the group’s growing ability to fund its own operations through bank heists, extortion, kidnappings and other tactics more commonly associated with the mob than with violent Islamist extremists.

In its early years ISIL, like the Taliban and other Sunni militants, received most of its funding from wealthy donors in Kuwait, Qatar and other Persian Gulf countries. Extremists in those U.S. ally states continue to send money to ISIL, but American counterterrorism officials believe that the group now finances the bulk of its recruitment, weapons purchases and attacks without outside help.

In other words, even if the United States and its allies somehow stopped the flow of money from the Persian Gulf to the battlefields of Iraq and Syria, it would be too late to prevent ISIL from banking enough money to fight on for years.

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At the high end, some analysts estimate that the group may have access to at least $500 million (U.S.) in cash drawn from bank robberies, oil smuggling, and old-fashioned extortion and protection rackets. Other analysts believe the number is far lower, with one official putting it at between $100 million and $200 million.

Those numbers are moving higher as the group conquers more cities and is able to loot the local private and government banks.

Calculating the true size of ISIL’s coffers is complicated by the lack of U.S. intelligence assets in the areas the group controls in Syria and Iraq and by the difficulty of sorting through the group’s sophisticated propaganda efforts.

In closed-door briefings on Capitol Hill, senior officials from the intelligence community dismissed the initial reports that ISIL may have stolen more than $400 million from the bank in Mosul and said those figures were highly exaggerated. “We’re talking tens of millions from Mosul, not hundreds of millions,” one official said.

Either way, ISIL is one of the best-funded extremist organizations in the world.

The Iraqi military has largely collapsed since ISIL launched its surprise offensive earlier this year. The fleeing Iraqi troops left behind enormous quantities of American-donated armoured vehicles, weapons, ammunition and other military supplies. All of that is now in the hands of ISIL fighters.

Juan Zarate, a former assistant Treasury secretary who led the department’s crackdown on terrorism financing, said ISIL was carrying out a significant amount of crime in the growing swaths of Syria and Iraq that it controls. Foreign donors, he added, were stepping up their support for the group because of its successes against the hated secular government of Syrian strongman Bashar Assad and the equally unpopular Western-backed, Shiite-dominated Maliki government.

“It’s the worst of all worlds: external funding from wealthy outside donors, state sponsorship from across the Persian Gulf, and the ability to raise large amounts of money locally,” Zarate said.

ISIL’s ability to self-fund its operations comes from its willingness to blend traditional criminal techniques with the lucrative opportunities that come from controlling oil-rich swaths of land. A recent research note from the Council on Foreign Relations concluded that even before the group’s conquest of Mosul, ISIL “extorted taxes from businesses small and large, netting upwards of $8 million a month, according to some estimates.”

“This kind of money allows them to start thinking bigger and broader, and about a long-term strategy for where they want to go,” Zarate said. “That begins to give them reach, which is really dangerous.”

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